Correlation Between Baker Steel and VF Corp
Can any of the company-specific risk be diversified away by investing in both Baker Steel and VF Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Baker Steel and VF Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Steel Resources and VF Corp, you can compare the effects of market volatilities on Baker Steel and VF Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Baker Steel with a short position of VF Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and VF Corp.
Diversification Opportunities for Baker Steel and VF Corp
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Baker and 0R30 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and VF Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corp and Baker Steel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Baker Steel Resources are associated (or correlated) with VF Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corp has no effect on the direction of Baker Steel i.e., Baker Steel and VF Corp go up and down completely randomly.
Pair Corralation between Baker Steel and VF Corp
Assuming the 90 days trading horizon Baker Steel Resources is expected to under-perform the VF Corp. But the stock apears to be less risky and, when comparing its historical volatility, Baker Steel Resources is 1.64 times less risky than VF Corp. The stock trades about -0.03 of its potential returns per unit of risk. The VF Corp is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 2,153 in VF Corp on November 5, 2024 and sell it today you would earn a total of 500.00 from holding VF Corp or generate 23.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Steel Resources vs. VF Corp
Performance |
| Timeline |
| Baker Steel Resources |
| VF Corp |
Baker Steel and VF Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and VF Corp
The main advantage of trading using opposite Baker Steel and VF Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel position performs unexpectedly, VF Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in VF Corp will offset losses from the drop in VF Corp's long position.| Baker Steel vs. Adriatic Metals | Baker Steel vs. Eastinco Mining Exploration | Baker Steel vs. Medical Properties Trust | Baker Steel vs. LPKF Laser Electronics |
| VF Corp vs. Norwegian Air Shuttle | VF Corp vs. Lindsell Train Investment | VF Corp vs. United Airlines Holdings | VF Corp vs. Lowland Investment Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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